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Thursday, May 23, 2019

After Amazon announced it had abandoned its plans to build a headquarters in New York City, Alexandria Ocasio-Cortez tweeted her delight: “Anything is possible: today was the day a group of dedicated, everyday New Yorkers & their neighbors defeated Amazon’s corporate greed, its worker exploitation, and the power of the richest man in the world.”

It is easy to mock this political neophyte and her misguided economic proposals that would bankrupt the United States in attempting to achieve net-zero emissions. Instead, we should take seriously the danger that socialist ideas pose and consider how to counter them.

Time and time again, malignant political ideologies have infected countries. Currently, the United Kingdom is facing the frightening ascent of Jeremy Corbyn, a socialist/Marxist widely regarded as an anti-Semite who until recently was a mere backbencher. As Ocasio-Cortez warned, “Anything is possible.”

Disturbingly, at a time when communism and socialism should be totally discredited, socialism is enjoying a renaissance of respectability in the United States, and there has not been a plain-spoken, coherent critique. Ideas drive policy. Already, previously moderate U.S. politicians are vying to offer quasi-socialist solutions.

The press’ power brings with it an obligation to highlight the seductive dangers of socialism—exemplified by the failures in the Soviet Union, Cuba and Venezuela. Unfortunately, the press is merrily covering Ocasio-Cortez and her cohorts instead of making clear the superiority of capitalism.

I am not part of the chattering class but, based on my experience working with family businesses, I shall suggest a source of capitalism’s success and a way for the press to foster an appreciation of capitalism at a time of popular backlash against Silicon Valley billionaires.

I contend that the press should cover private businesses—the bulwark of our economy—more closely. People (such as “everyday New Yorkers and their neighbors”) relate more readily to these middle market and small business owners than to mega-corporations and billionaires. Focusing on these owners would remove the sting in the Ocasio-Cortez tweet about “the power of the richest man in the world.”

Consider the innovative New York City “Billion Oyster Project’s” restaurant shell-collection program. Restaurants provide free oyster shells—thereby saving themselves carting expenses — for oysters that are used to create reefs to save the city’s eroding harbor. Think of the more mundane examples of mutual benefit created by companies that finance student expenses in order to develop a pipeline of trained workers.

Regardless of the profit motivation of these owners, their actions benefit society. Similar actions by countless business owners validate the statement of Israel Kirzner, professor emeritus of New York University, that “the essential quality of a market system, contrary to popular thinking, is not that it promotes greed; but rather, that it renders greed harmless.”

Kirzner has explained that entrepreneurs create what never existed before; they do not take what belongs to anyone else. If oranges cost $5 but an entrepreneur discovers that they can be sold as marmalade for $12 at a manufacturing cost of $4, then the entrepreneur has discovered/created $3 ($12-$5-$4). The entrepreneur perceives an opportunity that others had not noticed, and the entrepreneur’s find belongs to him. If this understanding of the entrepreneur’s role would be shared by the press, it surely would undercut demagoguery such as Ocasio-Cortez’s against “corporate greed.”

Press coverage would also reveal the self-actualization of these “accidental heroes.” Free enterprise enables people to be individualistic—to take chances, to do what others think foolish. Their individualism is a dramatic and profoundly human contrast to the dull uniformity of “socialist man.”

Also, even if the intentions of “accidental heroes” are usually not heroic, many of their character traits may be considered heroic. They exhibit at least two of the virtues Aristotle described in his “Nicomachean Ethics”—courage and appropriate ambition. Anyone who has struggled to make a payroll knows it requires great personal risk and determination. The public, especially millennials, would benefit from the celebration of these virtues.

The Aristotelian virtues that are latent in capitalism—courage and appropriate ambition—foster a spirit significantly more benevolent than socialism. The freedom to be individualistic unleashes creativity that is both personally fulfilling and productive for society.

Capitalism, though flawed, promotes human dignity and democracy. Our society, especially the youth, needs to understand that profit motivation is mutually beneficial. My heartfelt plea to the press is: Use your power wisely and responsibly. Promote appreciation of capitalism by covering the “accidental heroes” of private business. Our society needs you.

Sheon Karol is a managing director and member of the management committee of The DAK Group, a boutique investment bank. He is the recipient of the Atlas Award for “Boutique Investment Banker of the Year (2018).”

By Sheon Karol, InsideSources.com